First off, well done – you’ve made a life in a new country and haven”t forgotten about your financial future.
A lot of British expats forget about the benefits they leave behind (like pensions), when moving overseas. If you’re not careful to replace them with something else, retirement could be a struggle.
How much do you need to save & invest?
In the UK, 8% of your salary gets paid into your pension every month, on autopilot. That money gets invested, in stocks and bonds, and should keep growing until you reach retirement age.
But overseas, most employers aren’t so generous. Outside of Europe, the only retirement provisions most expats get is an End of Service Bonus.
Usually it’s around 1 month’s pay per year, but only based on your basic salary (often less than half of your total pay). And it’s rare that bonus is ever investing something that grows.
So you’ve gone from investing 8% of your salary, to probably saving less than 4%.
On a salary of £50,000 over a 15 year period, relying on an end of service bonus could leave you £50,395 worse off, compared to a typical UK workplace pension.
Just to keep up with people in the UK, once you account for the lost investment growth, you need to be investing about 6% of your monthly salary.
For a your ideal retirement, you might need to save closer to 20% of your salary!
Should I invest in GBP or in local currency?
The answer here depends on three things:
- Do you plan to live your new country permanently?
- Does it have a stable currency?
- What investment options are available in that currency?
Let’s look at the considerations for each.
Do you plan to live your new country permanently?
Generally you want to align the currency of your savings and investments, with the currency you plan to spend I the long-term. For many people this will be your home currency.
Doing this removes the risk of currency fluctuations eroding your savings. The last thing you want is to spend years saving, only to find as you move overseas the currency moves by 10-20% and you don’t have as much as you thought.
Does it have a stable currency?
If you’re planning to settle down overseas for the long-run, holding investments in local currency can make sense. But it’s important to consider how volatile it is.
If your local currency has a habit of wildly swinging from one extreme to other, it could be sensible to keep your savings in a more stable currency.
This will protect the value of your wealth, incase you do move internationally again, and also for your overseas spending needs. For less stable currencies, it usually only makes sense to keep the money you might need in the near future in local currency.
What investment options are available in that currency?
The last consideration is the range of investment options available in local currency.
In many places you’re limited to a small selection of expensive investment funds – where if you invested in pounds, dollars or euros you could access thousands of different choices.
Sticking with a major currency means you don’t have to limit your investment options.
Should you focus on investing in UK companies?
A lot of investors have a “home bias” – by default most of their money ends up invested in their local stock market. But it’s rarely a smart way to invest.
Let’s take the UK for example. The whole UK stock market contains about 1,300 companies. But the global stock market has over 50,000.
If you only own companies in the UK, you’re placing a bet on the future of the UK economy. As a British expat, who may spend your life overseas, does it make sense to tie the future of your wealth, to a country you don’t live in?
Beyond home bias, by owning the global stock market, you position yourself to capture returns, wherever they occur. It takes the guess work out of investing.
Can British expats add money to an ISA?
In short, no.
Once you leave the UK, you can’t pay money into an ISA. It’s against the rules, and likely to land you in trouble with HMRC. If the product provider finds out, they’ll usually close your account.
You can keep an existing ISA, but not add to it. You can transfer your existing ISA to a new provider. You can also convert a Cash ISA to a Stocks & Shares ISA. And switch investments inside of an existing ISA.
But you can’t add more money.
Beware – most expats don’t realise that ISAs aren’t recognised as a tax-wrapper outside of the UK. It only protects your investments from UK taxes, not local taxes.
So if you keep investing through your ISA, there may be local taxes to pay, even if your funds never leave your ISA account..
What about adding funds to a UK pension after you’ve moved?
This is a bit more flexible, but still far from optimal.
To pay into your UK pension, you normally need UK relevant earnings (from employment – rental income doesn’t count). However there is a small exemption.
Expats can pay up to £2,880 per year (£3,600 after tax relief) with no UK relevant earnings, for the first 5 years you live overseas. After 5 years, you can’t add any further funds.
To do this, you’ll often need to transfer your pension to a SIPP. This is because most workplace pensions can’t accept further contributions, after you’ve left your employer.
Unlike ISAs pensions are usually still recognised as tax-wrappers overseas, meaning there is no ongoing taxation. But many countries don’t recognise UK tax-free lump sums.
It’s essential to get old UK pensions reviewed once you stop adding funds. Most are invested in the wealth-destroying “lifestyle funds”.
Should British expats stick to UK based investment providers?
Whilst UK based investment providers will be familiar, they’re rarely open to dealing with non-residents, and from a tax perspective are far from ideal.
Flexibility
Most UK banks, pension providers, and investment platforms, don’t want to help expats. Look at Barclays UK as an example, they decided to close all non-resident accounts in 2023, leaving most with little time to set up alternative arrangements.
A bit like ISAs, if you have a UK based account and move, you might able to keep it. But you’ll struggle to open a new one.
A better solution is finding an investment provider that specialises in expats – they won’t mind if you move overseas.
Tax
The complications don’t stop with your account potentially being closed either. You might get a bill from HMRC.
Depending on the double tax treaty with your country of residence, holding investments in the UK might also leave you with a UK tax bill. UK sourced interest and dividends can still be subject to UK taxes, even if you live overseas.
It’s a complex area that often requires specialist tax advice, because it varies from person to person.
As an example – the UK dividend tax-credit for non residents was removed in the 2025 UK Budget. If you also have property income or employment income sourced from the UK, this could be a big issue, but not if you can treat it as disregarded income.
However, the easiest way to deal with it, is holding your investments offshore. By doing so, you’re protecting yourself from future changes to UK legislation.
What are the alternatives for British expats?
ISAs and Pensions are just UK tax-wrappers, they’re essential and investment platform, that allows your buy stocks, bonds, mutual funds or ETFs, without tax headaches.
The good news is that living overseas – you don’t need a UK tax wrapper anymore.
The right product will depend on the country you live in. In some areas of Europe, comparable products like investment-linked life insurance exist.
In other areas like the Middle East, Asia, and countries without tax-advantaged products, and offshore investment account is the best solution.
Offshore Investment Accounts
These are usually based in tax-friendly offshore jurisdictions, like Jersey of the Isle of Man. Where they’re covered by depositor protection regimes (usually for £50,000).
They’re catered to dealing with expats, so when you move, your investments can travel with you. No need to swap from one local product to another.
Most offshore investment accounts provide access to over 5,000 different investment options, in a range of currencies.
And many major UK investment providers, who wan’t to work with expats, already have on offshore entity set up to do so – a more flexible route than using their local branch.
Local Tax-Protected Investments
Check out some of our articles, on local investment products, and offshore investment accounts, here:
Want to understand how your wealth can support your future?
If you’re an expat with over £150,000 to invest, arrange your complimentary initial consultation today.
